Coca-Cola (KO, $51.06) beats Q3 earnings estimates

Coca-Cola Co.  reported third quarter earnings that surpassed analysts’ estimates.  However, the beverage behemoth did not  provide a full-year profit guidance amid the coronavirus pandemic. 

Coca-Cola’s adjusted non-GAAP earnings for the three months ending in September came in at 55 cents per share, down one penny year-over-year, but beating the Street expectations of 46 cents.

Net sales fell -9% to $8.65 billion, beating expectations of $8.36 billion.

Organic sales dropped -6%.  Unit case volume (which helps measure demand without the impact of pricing or foreign currency) declined -4%.

The company mentioned quarter-over-quarter improvements in demand. While the pandemic continues to pose challenges to demand at movie theaters, restaurants and office buildings, Coke said at-home demand is still strong. Thanks to higher sales at fast-food restaurants and convenience stores, away-from-home volume fell by the mid-teens this quarter, an improvement from its low of  50%.

Tickeron's analysis shows: 

KO sees its 50-day moving average cross bullishly above its 200-day moving average

The 50-day Moving Average for KO moved above the 200-day moving average on October 09, 2020. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.

Current price $51.07 crossed the support line at $49.56 and is trading between $52.41 support and $49.56 support lines. Throughout the month of 09/21/20 - 10/21/20, the price experienced a +2% Uptrend, while the week of 10/14/20 - 10/21/20 shows a -0.26% Downtrend.

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on October 07, 2020. You may want to consider a long position or call options on KO as a result. In 33 of 95 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 35%.

KO moved above its 50-day Moving Average on September 24, 2020 date and that indicates a change from a downward trend to an upward trend.

Following a +1.25% 3-day Advance, the price is estimated to grow further. Considering data from situations where KO advanced for three days, in 110 of 332 cases, the price rose further within the following month. The odds of a continued upward trend are 33%.

The Aroon Indicator entered an Uptrend today. In 131 of 321 cases where KO Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 41%.

Bearish Trend Analysis

The 10-day RSI Indicator for KO moved out of overbought territory on September 03, 2020. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 38 similar instances where the indicator moved out of overbought territory. In 8 of the 38 cases, the stock moved lower in the following days. This puts the odds of a move lower at 21%.

The Stochastic Indicator may be shifting from an upward trend to a downward trend. In 17 of 77 cases where KO's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are 22%.

The Moving Average Convergence Divergence Histogram (MACD) for KO turned negative on October 19, 2020. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 57 similar instances when the indicator turned negative. In 12 of the 57 cases the stock turned lower in the days that followed. This puts the odds of success at 21%.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where Apple declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 20%.

KO broke above its upper Bollinger Band on October 08, 2020. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Tickeron has a negative outlook on this ticker and predicts a further decline by more than 4.00% within the next month with a likelihood of 40%. During the last month, the daily ratio of advancing to declining volumes was 1.35 to 1.

The Tickeron SMR rating for this company is 12 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is 45 (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 66, placing this stock slightly better than average.

The Tickeron Price Growth Rating for this company is 53 (best 1 - 100 worst), indicating fairly steady price growth. KO’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of 60 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (12.28) is normal, around the industry mean (8.73). P/E Ratio (23.51) is within average values for comparable stocks, (141.14). Projected Growth (PEG Ratio) (0.68) is also within normal values, averaging (1.12). KO has a moderately high Dividend Yield (2.89) as compared to the industry average of (1.33). P/S Ratio (5.49) is also within normal values, averaging (5.94).

The Tickeron PE Growth Rating for this company is 81 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

Contributor

Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.

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